Research & Discovery

December 13, 2017 | Claire Hall, School of Business

Some Nursing Homes are Inflating Their Medicare Ratings 

At least 6 percent of nursing homes inflate their self-reported measures, according to a study by UConn professors.

Elderly women in a nursing home. (Getty Images)

UConn professors find that some self-reporting by nursing homes, particularly the larger and for-profit facilities, is flawed. (Getty Images)

Nursing homes appear to inflate their self-assessments in an effort to improve their Medicare star ratings, according to a new study by UConn School of Business professors Niam Yaraghi and Ram Gopal and their colleague, Xu Han ’17 Ph.D.

The implications are important to patients, physicians, and payers who depend on the five-star Medicare rating system to differentiate the quality of facilities. The Medicare ratings reflect a base score, obtained from an objective on-site inspection, plus two scores from facility-reported information on quality and staffing. Self-reported scores have trended upward, resulting in overall ratings improvements.

Families rely on these ratings to provide the most accurate information possible about their choices. — Niam Yaraghi

The study, published this week by the National Institute for Health Care Management Foundation, investigated whether the ratings increases reflect actual quality improvements or unjustified score inflation. It found that at least 6 percent of nursing homes inflate their self-reported measures, most often the larger and for-profit facilities that stand to gain most financially by improving their scores.

The researchers investigated 1,200 nursing homes in California between 2009 and 2013. Data included the facilities’ star ratings and other information from Medicare files, as well as information on facility finances and residents’ complaints. They used the ratings and financial data to compute the average daily profit per resident for each star rating level.

They also studied same-year correlations between the inspection and the self-reported ratings to identify the degree of internal consistency.

The study drew five key conclusions:

  • Nursing homes with more to gain financially from higher ratings are more likely to improve their overall Medicare rating through self-reporting.
  • There is little direct connection between self-reported measures and on-site inspection scores.
  • The number of resident complaints is similar for nursing homes with the same objectively derived inspection rating, but varies significantly between facilities with the same overall rating, suggesting inflation in self-reported results.
  • At least 6 percent of nursing homes inflate their self-reported measures, based on the study.
  • Larger nursing homes and for-profit facilities and those with the most to gain financially are more likely to inflate self-reported rates.

“Often the decision to move a loved one into a long-term care facility is a very difficult one, and families rely on these ratings to provide the most accurate information possible about their choices,’’ Yaraghi says. “Although a relatively small number of the approximately 15,000 U.S. nursing homes seem to inflate their score, it is a disservice to patients and families alike.”

The researchers hope the findings can help Medicare focus its future audits more strategically and make improvements to its inspection process and ratings system.

Gopal is head of the Department of Operations Information and Management at UConn. Yaraghi, a professor of operations information and management who joined the UConn faculty this fall, is also a non-resident fellow at the Brookings Institution’s Center for Technology Innovation, and is an expert on the economics of health information technologies. Han earned a Ph.D. from the UConn School of Business and now teaches at Florida Atlantic University.